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Clear info on home solar power rebates, tax credits, and other benefits

A Financing Option For Solar


By Guest Author Dean Konstantine

People say they can’t afford solar. The reality is, you can’t afford not to go solar!

Let’s go over an example of a California solar system and run some rough numbers on a guy with a $300/month electric bill.  Assuming our homeowner needs a 5200 watt system to zero out his current electric bill of $300.

System Size 5.2 kw (5200 watts) x $9/watt = $46800
State rebate tier 3 $1.90 = -$9,880 cash rebate
Balance Financed = $36920 (zero down program OAC)
Clean Power Financing Interest 6.99% APR
Amortization 15 years
Monthly Clean Power Payment = $270
Savings over electric bill per month = $30
Federal Tax Credit @ 30% = $12,480
Assuming an annual tax refund of $2,496 From 30% tax credit
Tax refund applied to solar Financing Accelerated payoff Program
Allows a 15 year loan paid off in 7 years By applying annual tax refund towards loan
Interest saved on accelerated payoff = $11,081
Electric Bill Savings over 7 years = $2,520
Total Savings = $13,601
Electricity cost starting year 8 = $0

Here the state rebate drops as more and more people install solar on their homes.  It just dropped from $2.20/Watt to $1.90/Watt and could drop again in a few months.

On top of that handsome state rebate, you can stack the Federal tax credit for solar, a 30% tax credit of the total cost of a system (minus the state rebate). That works out to about a $2.30 a watt of savings. This year (2008) the 30% tax credit has a cap of $2000 for residential customers, but beginning in 2009 the cap has been eliminated.

So the government is willing to pay for half of your system.  Wait till electricity prices rise to the point where solar makes financial sense without the rebates and see if those subsidies are still there.  Solar lasts for decades… the free cheese won’t.

But, what about the cash upfront?  Well, for those with solid credit, there are new loan products sprouting up which will incorporate the assumed increase in value to your home created by the solar system, allowing you to qualify for a higher loan-to-value ration (the interest is also deductible).  Unsecured loans are also available.  Finally,  there are short and long term ease programs for both residential, commercial, and government agencies.

Businesses can reduce take advantage of depreciation and have greater flexibility to deduct lease payments.

Most of the time, buying makes sense to me.  Some installers have leasing options which can be compelling for people who cannot get financing or if the up-front cost is just not digestible.  However, I’d rather own the commodity producing machine on my roof.

Remember, sunlight is free, you’re just paying for the equipment to harvest it. Once you pay it off, the sun will set you free!

Dean Konstantine
Solar Utilities Now
www.solarutilitiesnow.com
760-961-2332 X11

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One thought on “A Financing Option For Solar

  1. Henry A Park says:

    Hello;

    I have an idea that if you put solar panels on top of school buildings you could generate enough energy to run the schools and then sell the excess energy back to the local electricity company to actually make a profit and help reduce the cost of running the public schools.

    Another idea that I have is to put solar panels on top of the local Wal-Marts and other big buildings to help pay for the cost of cooling them down.

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